RBS Fails to Block Highland Texas Fraud Suit After Trial `Lies’

A London appeals court refused to
block Highland Capital Management LP’s Texas fraud lawsuit
against Royal Bank of Scotland Group Plc over a collapsed debt
deal.

The three justices today also overturned a 2010 ruling that
Highland owed RBS about 19 million pounds ($29 million) in light
of dishonest evidence given by the Edinburgh-based lender.

That judgment was “obtained by the fraud of RBS through
the misstatement and concealment of facts,” by one of its
witnesses, former trader Sam Griffiths, appellate Judge Richard Aikens said in a written decision.

Highland claims it lost as much as $100 million when RBS
improperly terminated a collateralized-debt obligation and
seized the underlying loans in 2008, at the height of the credit
crisis that followed the collapse of Lehman Brothers Holdings
Inc.

RBS spokeswoman Rebecca Nelson declined to comment.

“This judgment validates Highland’s position that no
financial institution, regardless of size, is above the law,”
the Dallas-based firm said in a statement. Highland manages
about $18 billion, chiefly in credit markets.

In May of last year, London Judge Michael Burton ruled the
bank’s actions had been legal despite the dishonest evidence.

The court of appeal today overturned the decision against
Highland and rejected RBS’s request for an injunction stopping
the Texas lawsuit.

The judges today said Griffiths “had lied” about his
knowledge of the CDO loans and that he had done so on behalf of
RBS.

Griffiths was later fired by RBS and is now suing for
unfair dismissal. His lawyer Raja Nadarajan didn’t immediately
respond to an e-mail seeking comment.